For almost 100 years, the Swiss firm of Hermes has specialized in the manufacture of sweeteners. It has worked with IT since 1982 – at first with proprietary solutions. Since 1997, it has worked with an integrated, but inadequate system that was strongly oriented to the metal industry. The solution did not cover the concrete requirements of the food industry, such as batch traceability. Above all, Hermes was unable to realize flexible planning of production orders. Manual planning demanded a great deal of time, and a rapid reaction to new orders was impossible.
Hermes spent two years looking for a software solution better tailored to its needs. It chose SAP from among 16 suppliers, primarily because of the comprehensive planning functions and the investment security offered by over 1,000 installations in Switzerland. SLI Consulting AG stood fast as the implementation partner. It had already analyzed the existing system landscape and processes at Hermes.
After eleven and a half months, the soft go-live occurred as planned on January 6, 2003 at two locations: Zurich (management and sales) and Vouvry (production). Helmut Nonn, director of finance and administration at Hermes describes the ease of conversion to SAP R/3 4.6C: “Putting the plug of one system into the other – it was anything but spectacular.”
Graphical Planning Tool: The Bridge Between Sales and Production
But spectacular does describe the improvements that Hermes achieved with the newly implemented graphical planning tool. Hermes is probably the first user to work with all functions of the tool completely. The tool enables the company to optimize its production planning and design it more flexibly.
Previously, all production orders had to be created manually in a separate IT system. Every change meant deleting and reentering the orders. To visualize the process, planners used a board with magnetic strips, each with production orders written on it.
The board could easily handle some tasks. For example, placing new orders or postponing follow-up orders posed no problems. However, this approach did not bring data into conformity with IT. In other words, if the production number, starting date, or quantity changed, the planner had to maintain the new data manually in the system and recalculate the production plan. Bottlenecks for materials or machines became evident only afterward. And there was always a potential for error because of reentering the order data.
MRP Controller in the Picture Right Away
Today, the old boards used since 1976 are just decorations and reminders of the old days. The planner’s workstation is now a computer whose screen displays the planned orders clearly on a graphical capacity planning table. The SAP solution takes care of the calculations needed to produce the production plan.
Once sales releases orders, SAP R/3 creates the first level of planning orders. All the orders released for production can be dragged from an order pool – preplanning – into current production planning with the mouse. The solution uses simulations to compute the new production plan with optimal set-up times and the required materials. The MRP controller sees any capacity bottlenecks that might occur immediately in a list, such as unavailable raw materials or machinery.
Optimized Set-Up Times
The planning solution has also optimized the set-up times for machinery. The solution automatically plans production orders to require minimal conversion times between orders. For example, all products that need the same or similar packaging are produced right behind each other. The only differences are the recipes, the charge, or the covering.
The MRP controller gets a quick overview of the technical requirements for production just by positioning the pointer on individual orders. A pop-up message displays the order’s parameters, including the type of packaging, the volume, the country, and the charge.
The SLI consultants spent two months modifying SAP Production Planning to meet Hermes’ needs. “We’ve taken full advantage of all the options for detailed planning that the solution offers – we’re even the first ones to use some of the functions at all,” says Helmut Nonn. “Visualization of planning with simple options for simulation with drag and drop – that eases things for us enormously. And we also save time because of the optimized set-up times.”
Sales, Demand Planning, and Production from one Mold
Sales, demand planning, and production were never integrated before. Because these areas were not coupled to each other, the demand planning performed by the sales staff had no consequences for preplanning production – and therefore occurred completely independently of capacities and reserves. Today, the sales staff has access to all plan data. As soon as an order comes in, they can use an availability check to see exactly if the required material is available, when the order will be completed, and when it can be delivered. Sales personnel can now deliver part of the ordered goods immediately and postpone the rest of the delivery to the following month.
Now, an order is possible only if the request has already been entered into demand planning. The interplay between sales and production is thus much more relaxed, and demand planning has become much more exact. Long-term planning over 2 years and operative planning for the next 10 months are new features. Simulated material requirements are adjusted automatically so that they are always current.
Calculating Production at any Time
The numbers for controlling have also improved. Integration with Hydra, the time and quantity entry system used since 1995, enables concurrent calculations during production. Over 40 employees work with the SAP solution directly in production. The upcoming production order is selected by barcode, and Hydra captures the production times of the employees involved in manufacturing along with the machine times. The production orders are settled with the actual usage numbers. Data on the material used and the actual number of finished goods is reported to SAP R/3 over an interface. Final costing can be called in the solution immediately.